WTO (World Trade Organization) trade negotiators from around the world are in full panic mode to close the deal in their “Doha Round” of negotiations. (Each round of WTO negotiations is named for the city in which it began. This round was begun in Doha, Qatar in 2001. This round of negotiations has been focused on services, intellectual property, textiles and agriculture.) They are desperate to finish a deal before the Bush administration leaves office, acknowledging that any deal will have a much tougher time getting passed by the next administration. Bush has advised negotiators that he’ll sign practically anything they come up with.
Why have the negotiators had such a difficult time with this round? It’s because this round is more focused on concessions from wealthier nations, like the U.S., instead of lowering trade barriers among all participants. Like I said on page 162 of Five Short Blasts, the WTO has a secondary agenda to its stated objective of expanding free trade, and that is to elevate the standard of living of third world countries. The WTO has seen that free trade has done nothing to benefit these countries, so in this round of negotiations it’s taking a different tack. It’s seeking to grant free access to the U.S. market to those countries, while enforcing protectionism for them. In other words, they get to export to us while maintaining barriers to U.S. products. Just look at the following excerpts from this article:
The WTO’s Doha negotiations for a global trade deal were launched in 2001 to help poor countries export more and to boost the global economy. But they have missed a string of deadlines due to deep differences over how to lower barriers to exports.
Help poor countries by lowering barriers to exports. It’s an amazing repudiation of the very principle upon which the WTO is founded – that every nation benefits when it trades what it makes best for products made best by others. Ricardo’s principle of comparative advantage (the 1817 theory upon which free trade is based) says that it doesn’t matter whether a nation is rich or poor, trade will benefit both parties. Obviously, even the WTO doesn’t believe it when it enforces protectionism in favor of two thirds of nations. It begs the question: If protectionism is good for third world countries, why isn’t it good for everyone? When does “free” trade suddenly become a good thing and while protectionism stops working? Why not let each nation decide for itself what trade policies work best? Why do you have to arm-twisting and coercion if “free” trade is such a good deal?
He (Pascal Lamy of the WTO) added that to do that, WTO members still needed to reach an accord on three areas — agricultural subsidies, and agricultural and industrial custom tariffs.
This accord he’s talking about is the elimination of farm subsidies and all agricultural tariffs by the U.S. in particular, tilting the playing field in favor of third world countries, in order to drain more money from the U.S. economy.
Without a deal soon, the changeover of administrations in Washington and Brussels in 2009 risk causing several more years of delay, adding to concerns that support for free trade is giving way to protectionism as economic growth slows.
Those last three words could have been phrased “… as it becomes ever-more evident to Americans that their trade policy is a failure.” The WTO negotiators know a “pushover” administration when they see one, and they see that their window of opportunity is rapidly closing. Keep an eye on this situation and write your congressmen to oppose the deal if something does get passed. Otherwise, you can kiss goodbye the service sector of our economy (the sector that was supposed to be our salvation when we handed over the manufacturing sector), along with our agricultural sector. If we can hold them off, it could spell the beginning of the end of the WTO and the start of a slow rebirth for American industry.